As the US tightened sanctions enforcement, major refineries in India announced they have stopped buying Russian crude carried by the Russian fleet mainly owned by Sovcomflot, a trend likely to expand to buyers in the Far East. Two scenarios could emerge when Asian buyers walk away from Russian oil and/or Russian ships: 1) an increase of “shadow” Aframax fleet for Russia > India+China demand if crude exports remain at similar level (or possibly higher due to drone strikes taking out refinery capacity); 2) a substitute of Russian crude with imports from the Middle East and US Gulf by conventional ...
US Crude Balances and Exports Update
March 22, 2024
McQuilling has updated our latest forecasts for US Gulf crude balances and exports. According to our model, US Gulf exports are likely to trend negatively in April and May, a net reduction of 430,000 b/d compared to the Q1 average. We highlight the rationale below:
1) Near the end of Q1, major refineries in Europe and Far East will enter the seasonal maintenance period which will pull crude demand and imports lower. These two regions happen to be the main importers of US Gulf crude, therefore, putting downside pressure on crude exports from the US Gulf region.
2 ...
DPP Export Dynamics in the AG
March 15, 2024
Following on last week’s note highlighting export dynamics in the AG, we discuss the impact for AG voyages for both VLCCs and Suezmaxes. Regarding the monthly change in VLCC movements ex AG (including KSA, but also Iraq, etc.), we note an uptick in AG VLCC flows in 2024 to both Ain Sukhna (for full discharge) and for partial discharge with continued transit directly to European refineries. This marks a notable change from the previous 3 months, particularly December 2023, when all VLCCs sailed around the Cape of Good Hope.
However, we anticipate the VLCC AG>West flow to slow ...
Crude and Product Import/Export Dynamics
March 8, 2024
Top-line fundamentals show a tightening crude balance in Saudi due to continued voluntary cuts maintaining output at ~9.5mbd; however, a return of refinery utilization in the country of approximately 0.6 mbd between Feb 2024 and May 2024 (likely aided by strengthening distillate cracks during European maintenance season), will convert previous crude exports to product exports, particularly to the European market. As such, we anticipate lower crude volumes ex AG to Europe in the coming month(s), but instead favor increasing product flows, favoring LR demand - in fact, that trend line continues well into the year, assuming no change ...
OPEC Production Cut Scenario Analysis
Feb. 23, 2024
As we approach the next OPEC meeting on April 3rd, a survey released Friday (Feb 23rd) by Bloomberg, indicated oil industry participants and analysts are betting OPEC+ will extend production cuts beyond the first quarter of 2024. Of the 17 traders and analysts surveyed, 14 of them expect that OPEC+ will not make any changes to its current production plans in the coming quarter. The rationale for keeping production plans stable is that crude production has been above the demand levels since the beginning of this year and OPEC+ has had to keep oil off the market in order to ...
